The 17 non-universal serine codons (CTG) in the Candida rugosa LIP2 gene have been converted into universal serine codons (TCT) by overlap extension PCR-based multiple site-directed mutagenesis. An active recombinant LIP2 lipase was overexpressed in Pichia pastoris and secreted into the culture medium. The recombinant LIP2 showed distinguishing catalytic activities when compared with recombinant LIP4 and commercial C. rugosa lipase. The purified enzyme showed optimum activity at pH 7 and a broad temperature optimum in the range 30-50 degrees C. The enzyme retained 80% of residual activity after being heated at 70 degrees C for 10 min. Recombinant LIP2 demonstrated high esterase activity towards long-chain (C12-C16) p-nitrophenyl esters. Tributyrin was the preferred substrate among all triacylglycerols tested for lipolysis. Among cholesteryl esters, LIP2 showed highest lipolytic activity towards cholesteryl laurate. The esterification of myristic acid with alcohols of various chain lengths showed that the long-chain n-octadecanol (C18) was the preferred substrate. In contrast, the esterification of n-propanol with fatty acids of various chain lengths showed that the short-chain butyric acid was the best substrate. From comparative modelling analysis, it appears that several amino acid substitutions resulting in greater hydrophobicity in the substrate-binding site might play an important role in the substrate specificity of LIP2.